For any business operating in cash, an understanding of financial economy and regulatory requirements is imperative. A solid understanding of business responsibilities and potential risks helps eliminate fiscal threats to a business whilst also contributing to commercial planning. By reviewing a cash economy as a worldwide consideration, company owners are often better placed to improve practices and develop their businesses to evolve with industry changes.
It is the responsibility of business owners to ensure they make the necessary checks regarding the source and reliability of payments to ensure that money laundering risks are addressed. Irresponsible activity within a company, particularly a financial institution, can bring a business to a close or incur incredible financial penalty, so it is vital that employees and managers alike are aware of the threats associated with cash handling.
A world without cash?
With cash being the common currency internationally, it may be surprising to hear of any desire to entirely abolish this payment method. The Danish government, however, recently declared that it aims to eradicate cash in Denmark, in favour of electronic and digital financing, and nearly one third of the country has already embraced 'MobilePay' as the preferred choice for making payments in shops and transferring money. The Danish government has also made pre-election moves to abolish the legal requirement for many retailers to accept cash as payment in stores from as early as next year.
Likewise, there are ongoing concerns for individuals regarding their security in dealing with cash. The public needs confidence that the money they earn has the correct value in economic terms when it comes to spending it and this is becoming increasingly important for international travellers. For example, travellers to Greece are being urged to take euros in cash, due to the ongoing threat of a financial collapse in the country and instability of the local banking system. Should banks stop providing people with access to their finances, travellers without cash would likely find themselves completely unable to obtain cash. In the event of such a collapse, banks would probably cease services and the use of ATMs would no longer be viable.
Greece is by no means the only country that is currently suffering from poor financial assertiveness. Following massive overspending by various political parties, Nigeria is currently struggling with a cash shortage. Massive withdrawals by political parties has caused huge liquidity problems for the banks across the country, resulting in many people being unable to obtain cash.
The importance of due diligence in cash transactions
The system of a cash economy is fragile and, if abused, the consequences can be substantial. The nearly untraceable nature of cash lends itself well to those wishing to launder money, and it is vital that financial institutions maintain rigorous due diligence standards when accepting cash deposits.
It has long been vital that recognition is given to the risks associated with cash handling and that regulations are adhered to by all to minimise the risk of corruption and money laundering. In an age of globalisation, the internet and more recently Fin Tech, are we ready to abandon this archaic method of currency in favour of a more stable and secure means of paying one another?
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